A ‘once in a generation’ change to superannuation payments is just 100 days away from taking effect. (Source: Getty)
Workers across the country will see their superannuation paid sooner rather than later as new laws come into effect. Despite the federal government touting the benefits for millions of employees, most Australians aren’t aware of the new laws.
Small business owners and large companies have been told to prepare for months in order to comply with the changes. While ordinary workers won’t need to do anything different, it’s a good time to make sure you are across important details when it comes to your superannuation account, says major wealth manager MLC.
“With so many Australians still unaware the change is coming, MLC is encouraging people to use this as an opportunity to reconnect with their super,” said Dave Woodall, CEO of MLC Super.
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The new laws, known as Payday Super, will mean from July 1, employers will be required to pay employees’ superannuation at the same time as salary and wages. That means instead of the current quarterly super payments, businesses will have to pay the compulsory 12 per cent guarantee weekly, fortnightly or monthly, or face significant penalties.
Currently super is paid by businesses to a clearing house and then to a super fund, with the ATO having regulatory oversight. The ATO will be closing its small business superannuation clearing house from July 1, as part of the reforms.
“Payday Super will help boost the super balances in retirement for millions of working Australians. Paying super at the same time as wages means that more working Australians will see their retirement savings grow simply through being invested sooner,” Woodall said.
“Now is a great time to check that your superannuation fund details are correct and up to date. It may seem simple, but checking your personal details are up to date with your superannuation fund helps your fund and employer ensure your contributions, which are your retirement savings, land in the right account sooner.”
New research from MLC found that 80 per cent of Australians didn’t know about the Payday Super change, and 85 per cent didn’t know when it would come into effect.
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For a 25-year-old worker, the government found more frequent and earlier contributions would increase their balance by an extra $6,000 in retirement.
The legislation is also aimed at making the system simpler from the perspective of workers and eliminating unpaid super – something that the government says is worth many thousands to employees who have been ripped off.
The ATO estimated $6.25 billion worth of super went unpaid during the most recent financial year.
“Payday Super is good news for Australian workers and could add thousands of extra dollars to their super balance in retirement,” Woodall said.
“Although retirement might seem like a long way away for some, it’s important to remember that your superannuation is your money and that a glorious retirement is something that’s actually built by the choices people make today.”
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The new laws will mean small businesses will have to adapt their cash flow with some warning it will be difficult for many small operators to successfully implement.
Tom Adam, founder of Canberra Martial Arts and Fitness, told Yahoo Finance he supported the intent of payday super but was struggling with the implementation of it.
“I’ve got three businesses myself. We employ 23 staff. I’ve got colleagues around me and I’m pretty tech savvy, and I’m struggling with it,” he said last month.
“I don’t think the ATO has done enough to help educate people on the best way forward and I don’t feel that the ATO understands how much angst this is going to cause small business owners.”
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